Alerian MLP Index for Master Limited Partnershipshttp://www.alerian.com
Alerian MLP IndexTue, 31 Mar 2015 17:03:06 +0000en-UShourly1http://wordpress.org/?v=3.8.3We’re Hiring!http://www.alerian.com/we-are-hiring/
http://www.alerian.com/we-are-hiring/#commentsWed, 04 Mar 2015 18:15:45 +0000http://www.alerian.com/?p=6740Alerian was built on the idea that a really smart, friendly, willing-to-pitch-in person is an incredible asset to the firm. What’s it like to work here? We have no internal dress code but wear suits—cowboy boots optional—for external meetings. All employees have incredibly high standards when it comes to ethics and integrity. We may be a young firm, but we celebrate diversity and have a kitchen stocked with healthy snacks (and sometimes Cheetos). Alerianites are truly, madly, deeply passionate about something that is not finance. There are plenty of financial firms looking to hire people hungry for wealth and fame. We’re not one of them. Here are the three people we’re looking for.

Excel Wizard. This person double-checks everything, understands all calculations, makes and uses spreadsheets that are elegant and easy to understand, streamlines processes, removes inconsistencies, and triple-checks. Primary responsibilities include helping our Director of Data Analytics to maintain the databases and Excel files that are at the heart of our organization. We do most of this work manually (not pen and paper but also not relying on secondary sources). We need another set of eyes and another brain making sure every single number is correct every single time.

Graphic Designer. This person cares about the visual details, double-checks everything, demands perfection down to the pixel, has a great eye, and draws pictures on napkins to explain things to friends. Primary responsibilities include making our collateral look beautiful and professional. We’ll give you artistic license to create your best work. You’ll create fact sheets, presentations, charts, and graphs (we’ll give you the data), as well as create logos, color palettes, and the Alerian holiday card.

Intern. This person cares about the details, sees the big picture, owns at least two style manuals, is currently enrolled at an accredited institution, and may or may not be majoring in something related to finance. Primarily responsibilities include working with our Director of Research on data collection, as well as researching industry trends, companies, and themes.

To apply, please send your résumé as well as something that gives us an idea of who you are. It can be a cover letter if you’d like, but we’re open to submissions of all sorts. Honestly, we love to get creative applications. Questions and applications can be submitted to careers@alerian.com. Full job descriptions are available here.

]]>http://www.alerian.com/we-are-hiring/feed/0Visual Data: The One-Minute MLP Primerhttp://www.alerian.com/visual-data-the-one-minute-mlp-primer/
http://www.alerian.com/visual-data-the-one-minute-mlp-primer/#commentsTue, 03 Mar 2015 16:52:26 +0000http://www.alerian.com/?p=6729And with that clickbait title, here’s the one-minute investment case for MLPs. Feel free to share this infographic with all of your busy friends who can’t be bothered to read prose. You know what they say: a picture is worth a thousand words.

(Click on the image to download it as a PDF.)

]]>http://www.alerian.com/visual-data-the-one-minute-mlp-primer/feed/0By the Numbers: Increasing Legislative Risk for MLPs?http://www.alerian.com/by-the-numbers-increasing-legislative-risk-for-mlps/
http://www.alerian.com/by-the-numbers-increasing-legislative-risk-for-mlps/#commentsThu, 19 Feb 2015 18:00:36 +0000http://www.alerian.com/?p=6664On February 2nd, the Obama Administration released its budget for 2016. Since 2009, the President’s budget has had a long list of “fossil fuel tax preferences” it intends to eliminate. This year, fossil fuel publicly traded partnerships (i.e. energy MLPs) are included. They would be grandfathered until 2020 and would start paying corporate taxes in 2021. The Administration estimates that this would raise $303 million in the first year and $1.7 billion through 2025. Both amounts pale in comparison to the US national debt of $18.1 trillion and are dwarfed by the tens of billions spent each year by MLPs on the nation’s energy infrastructure.

Some information on the process: by law, the President submits a budget request to Congress between the first Monday in January and the first Monday in February. This is where we are now. It is then submitted to the Budget Committees of the House and Senate, as well as the Congressional Budget Office, which publicly publishes an analysis in March. The House and Senate consider the budget resolutions submitted by their respective committees, and by April 15th, are expected (but not required) to pass a resolution. Negotiations ensue. When there is a final budget passed by Congress, the President may either sign or veto it. Of course, this involves everything proceeding smoothly, which rarely happens. We digress.

In the past, Congress has simply ignored the Administration’s fossil fuel recommendations wholesale. A GOP-controlled Congress is unlikely to include this particular resolution simply because Obama suggested it. So, there are at least eight months before this could even potentially turn into a panic attack. Also, if the 120-odd energy MLPs with a total market capitalization of $500 billion would only pay $303 million in taxes anyway, how big of a hit would the stocks take?

When should you panic about Keystone XL? Probably never. But if it goes through, maybe pop open a bottle of ginger ale?

]]>http://www.alerian.com/by-the-numbers-increasing-legislative-risk-for-mlps/feed/0What Happened: As Goes January, So Goes the Year?http://www.alerian.com/what-happened-as-goes-january-so-goes-the-year/
http://www.alerian.com/what-happened-as-goes-january-so-goes-the-year/#commentsWed, 18 Feb 2015 20:00:08 +0000http://www.alerian.com/?p=6646January may not be a crystal ball for the rest of the year, but it’s still an important month. After election years, we get new members of Congress and a new president. The President proposes the budget for the following fiscal year. Companies release or update their guidance and projections for the coming year.

For upstream MLPs, as we’ve already noted, the situation looks grim. A majority have already cut their distributions this year, and the ones who haven’t warned that they might in the future. They are cutting distributions because their production is not as profitable as it was. In some locations, production is no longer economic, so they’re just not producing it. The exception to the upstream MLP rule in January was Memorial Production Partners (MEMP), which rose 17.8% during the month. MEMP has a robust hedging portfolio as well as a unit repurchase program for $150 million, or roughly 10% of the company’s market cap. MEMP maintained its quarterly distribution at $0.55 for a 12.8% yield as of month end.

The yield on the Alerian MLP Index (AMZ) at month end was 6.14%. With the 10-year Treasury yield declining to 1.64%, the spread widened to 450 bps, a level unseen since 2012 and 125 bps higher than the historical average. A 10-year history of the MLP-Treasury yield spread can be found here.

Every time we talk about what’s happening in this environment, we have to talk about commodity prices. Given the New Year, when everyone’s making resolutions and projections, it seems only reasonable to see what’s projected by whom. If you’d like to do some catch-up reading, there were a couple of articles published recently that do an excellent job of explaining where we are now. This New York Times article is an excellent introduction, while this long-but-worthwhile read in Barron’s is a more in-depth 201-style piece. The US Energy Information Administration (EIA) predicted in its Short-Term Energy Outlook that crude will average $58/bbl in 2015 and $75/bbl in 2016. Even with fewer rigs in operation, the EIA is expecting US production to increase throughout 2015 and into 2016 due to productivity improvements.

January was another one of those months where diversification really shined. The return differential between the best and worst AMZ performers, MEMP and EV Energy Partners (EVEP), respectively, was 45.0%. Since they’re both upstream names, it’s hard to blame the AMZ’s 3.1% loss on a total return basis on subsector performance. The Alerian MLP Equal Weight Index (AMZE) lost about half as much as the AMZ, suggesting that smaller names generally had a better January than large caps. As an example, Enterprise Products Partners (EPD), the largest constituent in the AMZ, lost 4.7% in January. But the top and bottom five performers represented 1.3% and 2.8% of the AMZ, respectively, so size wasn’t (and isn’t) everything.

Unless, of course, we’re talking about M&A activity. Larger, diversified, investment-grade companies tend to have the balance sheet flexibility to acquire assets at discounted prices in times of market turmoil.Kinder Morgan (KMI) CEO Rich Kinder, who in August described the MLP market as “a fertile field to do a little grazing in,” put the proof in his pudding by announcing the acquisition of Hiland Partners and establishing a strong midstream position in the Bakken by doing so. Plains All American Pipeline (PAA) announced that it added a $1 billion 364-day credit facility. The move from $2.6 billion of liquidity to $3.6 billion has primed the pumps with capital, just in case a good acquisition opportunity comes management’s way.

Just to close with a bit of gossip, Sandell Asset Management wrote an open letter to SemGroup (SEMG), encouraging the company to sell itself. Sandell hoped SEMG would turn subsidiary Rose Rock Midstream (RRMS) into a dropdown story so that SEMG would trade at pure-play GP multiples. As SEMG CEO Carlin Conner is not moving in that direction, or at least not at the pace or with the clarity that Sandell would like, the event-driven asset manager believes a sale would be more effective in maximizing shareholder value. The press release containing the letter goes so far as to list potential buyers: EPD, KMI, Magellan Midstream Partners (MMP), PAA, Spectra Energy Corporation (SE), and Sunoco Logistics Partners (SXL). When SEMG management responded, it basically said that the company is on track as a dropdown story, and that they’ve done some great things under Conner, who took over as CEO in April 2014. However, the Sandell letter pushed the stock up more than 8% on the day of release, and two weeks later, the company announced that RRMS would be acquiring all remaining SEMG crude oil assets.

]]>http://www.alerian.com/what-happened-as-goes-january-so-goes-the-year/feed/0Just Happened: Dominion Analyst Dayhttp://www.alerian.com/just-happened-dominion-analyst-day/
http://www.alerian.com/just-happened-dominion-analyst-day/#commentsWed, 18 Feb 2015 15:00:02 +0000http://www.alerian.com/?p=6637If you’re invested in MLPs for their current income, then Dominion Midstream Partners (DM) is not for you. The company’s 1.75% yield as of Friday’s close is lower than both the S&P 500 and 10-year Treasury yields at 1.95% and 2.05%, respectively. It is also the second-lowest yield in the energy MLP space among non-distressed, distribution-paying companies. Why the discrepancy of 400-plus basis points against the Alerian MLP Index (AMZ)? A basic economic principle: rational agents spend today in anticipation of future earnings. Similarly, investors bid up the unit prices today of those MLPs with the clearest visibility to long-term, above-average distribution growth. DM’s 22% CAGR through 2020 certainly falls into that category.

The first slide is the company’s blueprint for getting there. This level of detail not only allows analysts to better understand the timing of dropdowns; it also subtly points out that the assets being sold to DM have an organic growth component to them too. The $89 million of EBITDA projected for 2015 grows to $93 million in 2016 without an acquisition from the parent. The $129 million of EBITDA projected for 2016 grows to $139 million in 2017 without a deal. And so on. In 2020, when DM’s EBITDA hits $874 million, sponsor Dominion Resources (D) expects to generate an additional $1.7 billion in MLP-qualifying EBITDA at the sponsor level. Assuming the size of dropdowns in 2021 and beyond is consistent with the 2015-2020 period as a percentage of prior-year EBITDA, that gives DM another 2-3 years of top-tier distribution growth. In order for investors to continue to ascribe a premium valuation to DM in the 2020s, however, the company will need to keep replenishing its dropdown inventory. Fortunately for management, it has a relatively long time to do that as compared to most of its peers.

In the second slide, management describes its equity financing plans for these dropdowns. In short: don’t expect D to take a bunch of units in every transaction. Of the 126 million LP units that DM will issue through 2020, D anticipates taking less than 30% of them, resulting in a decline in its LP ownership stake to 43% from 69% at the IPO. In most instances, the knowledge that an MLP will finance an organic growth project or acquisition with public equity creates an overhang on the stock. But investors thus far have found DM’s growth trajectory so compelling that they’re not waiting for the discount associated with these follow-on offerings to take a position. D, meanwhile, will be putting the sales proceeds toward $19.2 billion of growth capex over the next six years, which management believes will drive annual earnings growth of 6%-7% and annual dividend growth of 8% over the same timeframe.

]]>http://www.alerian.com/just-happened-dominion-analyst-day/feed/0By the Numbers: Distributions in Jeopardy?http://www.alerian.com/by-the-numbers-distributions-in-jeopardy/
http://www.alerian.com/by-the-numbers-distributions-in-jeopardy/#commentsTue, 10 Feb 2015 22:00:18 +0000http://www.alerian.com/?p=6606If you called or emailed Alerian with a question about commodity prices over the past several months, you’ve probably heard someone on our team tell you that long-term fundamentals for most MLPs remain unchanged. That said, there’s one subsector in particular that needs a change in the near- and medium-term environment if it wants to be around for the long term.

Upstream MLPs are directly exposed to commodity prices. Their business model consists of buying oil and gas fields, optimizing them, and selling the resulting production to the market. Because its asset base of oil and gas reserves is always declining, an upstream MLP can only maintain its distribution if at least one of the following things is happening: commodity prices are rising, fields are available for purchase at a valuation cheaper than the company’s current trading multiple, and/or current fields are operated more efficiently. During the second half of 2014, commodity prices fell so quickly that the other two levers became irrelevant, causing a handful of upstream MLPs to cut their distributions this past quarter.

Of the 12 upstream MLPs currently trading, Sanchez Production Partners (SPP) does not pay a distribution and has not since the last commodity bust. Five companies cut their distributions this quarter, and six maintained their distributions.

What made the difference? Let’s use an example from each camp. First, Legacy Reserves (LGCY), one of the upstream MLPs that kept its distribution flat this quarter, and has maintained or grown its distribution every quarter since its 2007 IPO. As you can see below, the company managed to do this even during the oil crash of 2008.

When LGCY makes an acquisition, it partially hedges production for the next 3-5 years. Its oil production is 68% hedged for 2015 around $92, and its gas production is 76% hedged at $4.38. For 2016, 21% of oil production is hedged at $89, as is 20% of gas production at $4.26. That’s a decent amount of forward production sold at prices much higher than today’s.

On the other end of the spectrum is Mid-Con Energy Partners (MCEP), which cut its quarterly distribution 76% to $0.125 from $0.515. MCEP has 98% of its production weighted towards crude, and has hedged 74% of 2015 oil production at $76 and 56% of 2016 production at $70.

If the average price of crude stays at $50 for 2015, LGCY’s oil-related cash flow is better positioned.

By keeping its distribution flat for now and hedging out a lower percentage of 2016 production, LGCY is taking the more uncertain route of hoping that oil prices recover before next year is over. By cutting its distribution now instead, MCEP sports a coverage ratio of nearly two times, giving the company some wiggle room if prices don’t rebound sooner. LGCY is waiting it out, and MCEP is being more proactive. It may also be more psychologically difficult for a company that has paid eight years of stable and growing distributions (LGCY) to grab the knife than for a company with just over three years of trading history (MCEP) under its belt to do the same. Since crude oil’s June 20th peak, LGCY is down 52.5% on a price return basis while MCEP is off 69.1%. Sure, the former has done 16.6% better, but the market isn’t exactly treating LGCY’s current distribution as secure.

If you’re panicked that the upstream names are taking the entire MLP structure down with them, remember that they are only about 3% of MLP market cap. Assuming the weightings in your diverse MLP portfolio are consistent with the broader universe, a worst-case scenario where every upstream MLP goes bankrupt costs you 300 basis points of performance.

]]>http://www.alerian.com/by-the-numbers-distributions-in-jeopardy/feed/0Just Happened: Spectra Analyst Dayhttp://www.alerian.com/just-happened-spectra-analyst-day/
http://www.alerian.com/just-happened-spectra-analyst-day/#commentsSat, 07 Feb 2015 04:45:38 +0000http://www.alerian.com/?p=6596It must feel good when your stock trades up 4.4% on the day that you host your analyst meeting. Executives are excited that investors like their plan for the future, IR personnel are happy that their presentation conveyed that plan effectively, and employees are enthusiastic about having a plan that they can get behind. What did Spectra Energy Corporation (SE) CEO Greg Ebel and his team do right? Let’s take a look (slide presentation here).

The Earth at Night map is both stunning and informative (additional evidence available here courtesy of the Suomi NPP). But what does that have to do with Spectra? A lot, when you overlay the company’s asset footprint and include the statement, “We go where the lights are.” Because the lights are generally concentrated in metropolitan areas, i.e. demand centers, and few expect energy demand to stop growing anytime soon, the implication is that SE’s plan to grow its dividend by 8%-9% per year through 2017 is secure because it is not dependent on the supply of US oil production continuing to grow and/or commodity prices rebounding.

The skeptic might point out on the second slide that Spectra is planning to grow its dividend over the next few years not by generating more distributable cash flow, but by taking its coverage ratio down to 1.0 times, leaving little room for error. That means regulatory approvals need to be secured and projects need to be completed on time and on budget at Spectra Energy Partners (SEP). Volumes need to meet expectations on fee-based contracts. And the loonie needs to strengthen a bit against the US dollar. So why don’t investors seem to be more concerned? Because the whole point of having a coverage ratio is to protect the company from events within two standard deviations, not for it to be constant throughout the business cycle. If a company stays meaningfully above 1.0 times in stress tests like the current environment, management might want to consider paying out more cash to investors. If coverage falls below 1.0 times, management likely wasn’t conservative enough in its scenario analysis.

]]>http://www.alerian.com/just-happened-spectra-analyst-day/feed/0Just Happened: Analyst Day Catch-Up, Marine Edition (GasLog, Hoegh)http://www.alerian.com/just-happened-analyst-day-catch-up-marine-edition-gaslog-hoegh/
http://www.alerian.com/just-happened-analyst-day-catch-up-marine-edition-gaslog-hoegh/#commentsThu, 05 Feb 2015 21:00:49 +0000http://www.alerian.com/?p=6583Here’s the third and final installment of the Analyst Day Catch-Up. Today, we tackle the maritime names: the GasLog family (GLOG and GLOP) and the Höegh family (HLNG and HMLP). We’ll begin by noting that our interest in both families is primarily at the MLP level, which probably comes as no surprise to regular Alerian Insights readers. That said, you can’t claim to understand a dropdown story if you’re not familiar with what’s happening at the parent company. As always, we encourage investors to do their homework.

If you want to get excited about the long-term outlook for LNG shipping, look no further than slides 7 through 21. In short, growth in European and Asian demand alongside growth in North American and Australasian supply equals more vessels on the water. If that’s old news to you, perhaps the slide above isn’t, depicting a meaningful escalation in the number of operating country-to-country LNG trades over the past 10 years. With more routes comes more logistical complexity, which likely means more vessels, especially in conjunction with the supply/demand forecast for the LNG trade. The US will be adding to that number as Sabine Pass comes online in late 2015 or early 2016.

Every management team thinks its stock is undervalued and GasLog is no different. Where its executives are unique, however, is that they actually bothered to explain why.

The company argues on the first slide that GLOP stacks up favorably against other MLPs in a scatterplot of current yield against expected growth. While this graph appears regularly in sell-side analyst reports and does a great job of explaining the inverse relationship between yield and growth for MLPs overall, it isn’t great for suggesting that a particular MLP is undervalued or overvalued because it lacks detail about each company’s business risks and financial situation. Few would argue, for example, that GLOP, despite higher expected growth, should trade at a yield in line with investment grade large caps like Magellan Midstream Partners (MMP), Sunoco Logistics Partners (SXL), and Western Gas Partners (WES). Per the second slide, it’s also unclear to us why investors would rerate the company’s valuation today based on fourth quarter 2016 annualized distributions.

Where the company does a far more effective job of highlighting its value proposition is on the third slide, which simply adds current yield to expected growth to calculate a total return for each MLP. The reason this slide shines is that it doesn’t say anything about how to risk that total return for each company. It simply says, this time next year, we’ll have the sixth best total return in this field of 78 MLPs. Take it or leave it.

Being linguistics nerds at Alerian, we love that Höegh brought its umlaut to the MLP community. The company also employed unconventional punctuation in its analyst day presentation, with an exclamation mark finding its way onto slide 6. Below we highlight two other unique slides of interest.

This is the first time we’ve seen a yield band time lapse in an analyst day presentation. But given that the peer group is only five companies, the graph might have been more informative if each company’s yield was shown. And though we like that management used a reasonable peer group to make the case that its stock is undervalued, we don’t believe that factoring in a dropdown at HMLP is appropriate without factoring in the dropdown plans of its peers.

It’s rare for the general public to hear about how IPO allocations work, which is why we included the second slide. The company noted on a previous slide that 69% of the institutions that met with management during the roadshow indicated for units on the deal, the institutional book was 6.6 times oversubscribed, and 129 institutions received at least one unit in the offering. But we’re focused on the 81% institutional allocation because it’s a reminder of how much the MLP investment world has changed as compared to 10 years ago, when branch meetings were an integral part of deal roadshows and a heavy institutional book consisted of a 25% allocation.

]]>http://www.alerian.com/just-happened-analyst-day-catch-up-marine-edition-gaslog-hoegh/feed/0Just Happened: Kinder Morgan Analyst Dayhttp://www.alerian.com/just-happened-kinder-morgan-analyst-day/
http://www.alerian.com/just-happened-kinder-morgan-analyst-day/#commentsMon, 02 Feb 2015 22:30:19 +0000http://www.alerian.com/?p=6573Being the first of the year, the Kinder Morgan Analyst Day (presentation available here) had a lot riding on it, especially given the recent consolidation transaction and renewed growth expectations. CEO Rich Kinder smartly opened the day with a conversation about the current commodity price environment and what it means for the US, producers, exporters, and midstream companies.

In short: near-term pricing is uncertain, US market share of oil and gas production will continue to increase, breakeven prices will continue to fall due to drilling efficiencies and pressure on suppliers, LNG export margins will fall, and the rate of US oil production growth will slow.

Kinder was quick to follow that assessment with how KMI is “set to weather the storm” with 85% of its cash flows coming from fee-based businesses (94% including hedging). While the investing public’s attention is currently focused (solely, it seems) on each company’s commodity price exposure, long-time energy infrastructure investors know that there are other risks to be aware of, including volumes, recontracting, tariff rates, and regulation. To address these concerns, Kinder included the slide below, which discusses each risk by operating segment.

The transparency here should help investors pacing their bedrooms at 2am get some sleep at night. Management expectations for 15% distribution growth in 2015 and 10%-plus annually through 2020 doesn’t hurt either.

]]>http://www.alerian.com/just-happened-kinder-morgan-analyst-day/feed/0Just Happened: Analyst Day Catch-Up, Canadian Edition (GEI, IPL, TransCanada)http://www.alerian.com/just-happened-analyst-day-catch-up-canadian-edition-gei-ipl-and-transcanada/
http://www.alerian.com/just-happened-analyst-day-catch-up-canadian-edition-gei-ipl-and-transcanada/#commentsMon, 02 Feb 2015 19:30:20 +0000http://www.alerian.com/?p=6557Here’s the second installment of the analyst day catch-up. If you missed the US edition, you can find it here. Today, we tackle the Canadians: Gibson Energy (GEI), Inter Pipeline (IPL), and the TransCanada family (TRP and TCP).

US investors in Kinder Morgan (KMI) and Plains All American Pipeline (PAA), among others, are probably familiar with the fact that their investment isn’t just in domestic energy infrastructure assets, but in Canadian ones as well. But they may be less aware that Canadian midstream companies are also extending their reach beyond national borders. GEI entered the US market with acquisitions in 2010 and 2012, and now provides environmental services and fluid handling, crude oil and NGL hauling, and production services solutions. But management isn’t done yet. In the first slide, it’s clear that GEI isn’t just waiting for deals to come its way; management has outlined two- and five-year plans for its US operations by both geography and activity.

So why bother getting involved in the US? Consolidation of the highly fragmented environmental services market appears to be one good reason. Referencing Wood Mackenzie, GEI notes that produced water and associated waste stream are expected to grow at a 5%-15% CAGR through 2020 in the Permian, Niobrara, Williston, Northeast, and Mid-Continent. These volume increases are due to the development of unconventional plays, the increase in horizontal drilling, and maturing base production, leading the ratio of water to production to increase to 3.1 in 2013 from 0.9 in 1980. If oil production continues to grow, then so will the volume of produced water and the need to deal with it.

In case you haven’t grown tired of talking about commodity prices, I’ll first quickly point out that IPL sources the Alberta Energy Regulator in noting that economic recovery in the Canadian oil sands and conventional Canadian oil plays requires a WTI price of $55-$110 and $50-$75, respectively. So why hasn’t IPL’s stock price suffered alongside oil prices over the past seven months? The slide on the left. 60% of its 2015E EBITDA comes from cost-of-service contracts, which have neither price nor volumetric risk. Few US midstream assets have similar contracts, which limit both upside and downside even more than fee-based contracts do.

Now to the second slide, why are we highlighting a list of the top 15 European independent storage owners? Three of the names have US ties. NuStar Energy (NS), one of the largest US petroleum transportation and storage companies, operates capacity in the UK and the Netherlands. Oiltanking, a global storage partner for oil and gas, chemicals, and dry bulk, took two of its US terminal assets public in July 2011 as Oiltanking Partners (OILT) and then sold its remaining interests to MLP bellwether Enterprise Products Partners (EPD) last year. And VTTI, co-owned by Dutch energy trading house Vitol and Malaysian shipping conglomerate MISC, recently took a minority interest in its global network of storage tanks public as VTTI Energy Partners (VTTI), becoming the first midstream company with mostly non-US assets to do so. The stock has held up well since its July 2014 inception, outperforming the Alerian MLP Index (AMZ) and Alerian MLP Infrastructure Index (AMZI) by 20% and 17%, respectively. VTTI’s success could prompt other independent global storage operators to consider launching their own MLPs. These companies could also be M&A targets for existing MLPs. VTTI noted in its IPO prospectus that the top 10 independents only own 16% of non-US terminal capacity, suggesting the opportunity for consolidation in that market.

Let’s just go to the elephant in the room. While there are certainly a few other companies in the business of owning and operating Canadian energy infrastructure assets, it has long been considered a two-horse race between Enbridge Inc (ENB) and TransCanada. From a total return perspective over the last 10 years, however, it’s been a one-horse race, with ENB outperforming TRP by 254% through December 31.

So what’s management’s plan to compete going forward? Higher annual dividend growth anchored by higher EBITDA growth. Two things should be noted, however. One, the asterisk on the first slide. A project can be commercially secure and never receive regulatory approval. Unfortunately for TRP investors, Keystone XL has become the poster child for this scenario. And two, a couple of weeks after TRP’s analyst day, ENB announced a 33% dividend hike in conjunction with a financial restructuring plan and a revised payout policy. ENB management now expects dividend growth for the 2015-2018 period to be 14%-16% annualized. So TRP is still trying to catch up.

Activist Sandell Asset Management has suggested another route to enhancing shareholder value: an all-in dropdown of the company’s US assets to TCP, a change in reporting metrics, and a spinoff of the company’s power business. It is perhaps noteworthy that in a 109-slide presentation deck, TCP was only in the subject line once, and even then just as a funding lever for its parent. For now, management does not appear to be interested in pursuing the all-in dropdown strategy previously employed by MLP parents Spectra Energy (SE) and Williams Cos (WMB) in 2013 and 2010, respectively. Unfavorable corporate governance has generally spared MLPs from direct activist engagement, minus this 2005 industry classic from Third Point’s Dan Loeb, but their indirect exposure through corporate parents could be on the rise.